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Kick Off: Westfield Corp versus Santos Limited

Globtrotting Westfield Corp (ASX: WFD) today takes on oil and gas producer Santos Limited (ASX: STO) in the Motley Fool’s ASX World Cup. It’s the last game of the second round, with the winner progressing through to the semi-finals and coming up against investment banking giant Macquarie Group Ltd (ASX: MQG).

Westfield is sporting new colours thanks to its restructure, and is now a truly global company, having offloaded its share of Australian and New Zealand shopping centres into Scentre Group Ltd (ASX: SCG). Santos, on the other hand is on the verge of a major transformation with a stake in 3 LNG projects, with 2 of those to come online later this year and one in the 2015 financial year.

So here are some important stats to consider before the games begins:

  Westfield Santos
Market Capitalisation $15.3 billion $13.9 billion
10-year total shareholder return 4.9% 11.1%
Trailing P/E ratio 16.4x 25.1x
2015 forecast P/E ratio 14.7x 13.9x
Last price $7.36 $14.26

Source: Reuters, Commsec

Game On

And we kick off with Westfield full of enthusiasm for its new structure and a portfolio chock-a-block with quality assets in major world cities, but thanks to unfair treatment of shareholders in Westfield Retail Trust during the restructure, the Lowys score an own goal! Oh no, that’s not what Westfield needed!

Santos leads 1-0, with plenty of time before the half-time break.

Looks like global economies might play a part in the result here, with the US economy staging a strong recovery, playing into the hands of Westfield. News that the US has overtaken Saudi Arabia as the world’s largest producer of oil, and will begin to export gas and LNG in the near future threatens Santos’ LNG projects. Westfield scores 2 goals in quick succession, and leads 2-1 at half time.

Going into the second half, Santos scores an own goal, after dropping a planned US$10 billion floating LNG project at the Bonaparte gas fields off Darwin. Westfield leads 3-1.

Can Santos get back into the game?

Yes it can! PNG LNG scores as production is set to commence later this year, with Santos’ 13.5% share set to deliver strong cash flows. 3-2 to Westfield, and we’re into injury time. Santos needs to score to send the game into extra time, but Westfield’s rock solid shopping mall defences are proving tough to beat.

And a shot on goal by Santos’s Gladstone LNG sails wide with just seconds to go!

The match ends with Westfield taking the honours 3-2. In the end, its defensive assets proved too strong for Santos.

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Motley Fool writer/analyst Mike King owns shares in Santos. You can follow Mike on Twitter @TMFKinga

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